Former bank president admits stealing millions in Ponzi scheme

Richard Freer has admitted his guilt in a Ponzi scheme that bilked investors… (CONTRIBUTED PHOTO, THE…)

May 07, 2014|By Riley Yates, Of The Morning Call

The former bank president's Ponzi-scheme victims were so many, they had to move his guilty plea hearing Wednesday to a larger courtroom at the Northampton County Courthouse.

There was Sandra Borger of Palmer Township, a 74-year-old widow who said she was forced into bankruptcy because she lost everything to Richard A. Freer, a financial adviser she had trusted.

There was Linda Smith of Philadelphia, who said she fears she will lose her home, which she re-mortgaged at Freer's advice to invest more money with him.

One victim, Diane Deyoung of Palmer Township, said she was glad for the first time in her life that her mother has Alzheimer's disease, since it saved her the shock of knowing what Freer had done. Two others said they were glad their elderly parents had died before Freer was arrested, for the same reason.

Even Freer's brother, Lawrence Freer, denounced him as he admitted in court to bilking investors of more than $10 million. Under Richard Freer's plea deal, he will be lucky if he is ever released from prison.

At 68 years old, Freer will serve 12 to 30 years in state prison on 181 felony charges of theft — a sentence that Judge Jennifer Sletvold imposed after a lengthy and emotional hearing before 60 of Freer's victims. And they represented just a portion of the 90 families whom prosecutors say Freer stole $10.13 million from.

"We always lived within our means and because he stole from me, we have nothing," said Lawrence Freer, who called his brother a "financial predator" who had "disgraced and destroyed" the family name.

"Richard, I ask you how could you do this to your friends, your family, your clients?" said another victim who lost everything, Nellie Santos of Hanover Township, Lehigh County. "How could you keep up with all those lies?"

Like all of those who rose to speak to Freer, Santos got no answers. In handcuffs and shackles at the defense table, Freer sat with his back to his victims, gazing down without acknowledging their presence.

Freer, of Palmer, worked for Lafayette Bank for 22 years and was president when forced to resign in 1991. Authorities said he ended up using the trust he had built in the community to steal from hard-working families who hoped their investments would pay for comfortable retirements or college educations.

Instead, Freer robbed Peter to pay Paul, using funds he took in from his unsuspecting victims to cover annuities that he owed other investors, authorities said. A grand jury last year recommended charges after a six-month probe sparked when one investor got a tax bill from the IRS that raised her suspicion.

Freer's attorney, George Heitczman, on Wednesday read a written statement on his client's behalf, saying that Freer was suffering from pneumonia that made speaking difficult. In the statement, Freer apologized to his victims and said he understood why they are angry and could offer no excuse for his crime.

Freer's only emotion came when Heitczman mentioned the defendant's family, when Freer tore his glasses from his face, causing them to tumble to the floor.

Freer said in the statement that he told himself when he started the scheme that he would find a way to pay his victims back. He said he now realizes that wasn't true.

"It was a lie from the beginning and I now know from my heart that it was so," Freer said.

Prosecutors have said Freer lived modestly in a rented house on Tatamy Road in Palmer, using part of the victims' money for daily living expenses. Though Freer sent some annual payments to his clients, he did so by raiding from his growing list of investors, authorities said.

The funds Freer stole are gone, said Assistant District Attorney William Blake, with only $54,000 recovered.

"Obviously, $54,000 isn't going to go very far in terms of paying back $10 million," Blake said Wednesday.

Heitczman said his client agrees that the thefts reached into the millions of dollars, but may challenge the exact amount, given the nature of a Ponzi scheme.

"Some of this money may have gone back to some of the victims, so the amount of restitution may be somewhat overstated," Heitczman said.

The grand jury found that Freer began the fraud while working for Aviva Insurance, which hired him in 2002. Though the company fired Freer in 2009, he continued to tell his clients that their investments were with Aviva.

Freer would promise investors high-yield returns with little or no risk, said the grand jury, which uncovered victims stretching from the Lehigh Valley to Florida and California. As Freer persuaded clients to entrust their money with him, they recommended other family and friends who would also be pulled in, investigators said.

In court Wednesday, victim after victim said they confronted Freer after learning of the criminal investigation, only to be told by him not to worry, that their money was safe.

"When I think of the definition of what a sociopath is, all I have to do is look at Mr. Freer," said John Koretski of Bethlehem.

Sletvold noted that she received many letters from victims who preferred not to speak in court, but still had what were "heartbreaking" stories to tell.

"You took for yourself what they worked for their entire lives," Sletvold told Freer.